Overwhelming Shipping Demand Resulted in FedEx Corporation (NYSE:FDX) Delaying Christmas Deliveries

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FedEx Corporation (NYSE:FDX) failed to ship many Christmas packages on time, but apparently avoided the disaster of the last two years. The company blamed a surprise increase in last-minute online shopping and bad weather in some parts of the U.S. for the delayed Christmas deliveries.

FedEx Corporation (NYSE:FDX) is apparently not revealing everything about its Christmas delivery troubles. For example, the company has not said how many packages didn’t reach their destination on time. However, it is possible the transporter moved a record number of packages during the Christmas week as it had predicted.

Last-minute orders

Long before the start of the 2015 Christmas holiday shopping, FedEx, United Parcel Service, Inc. (NYSE:UPS) and other transporters called on retailers to push forward final Christmas orders to avoid delivery challenges. A number of retailers asked their shoppers to comply with certain Christmas delivery requirements, basically completing their online Christmas shopping early.

However, some shoppers continued to place late orders, resulting in an unexpected surge in online shipping demand. That created a challenge in FedEx’s delivery system, resulting in delays in delivery of Christmas packages. The transporter was also forced to put its drivers on the road on the Christmas Day to at least reduce the delivery backlog.

Bad weather takes the blame

Besides overwhelming shipping demand, poor weather conditions in some parts of the country also introduced challenges in FedEx’s delivery system, thus resulting in delayed Christmas shipments.

Message to retailers

To a greater extent, FedEx Corporation (NYSE:FDX)’s announcement of the Christmas delivery hiccups appear to be directed at retailers. The shipper is kind of telling them to improve on last-minute holiday shopping, because that is where the problem stems – at least most of the time. In the holiday of 2013, FedEx and UPS disappointed their customers as they failed to get packages to their owners on time for the Christmas, a problem that has caused by sharp increase in final Christmas orders.

Internal delivery system

FedEx Corporation (NYSE:FDX)’s update on Christmas delivery challenges didn’t reveal the retailers who may have been affected. However, online retailers such as Amazon.com, Inc. (NASDAQ:AMZN) are building their own efficient delivery systems, partly to trim reliance on third-party shippers and their disappointments. Amazon is acquiring cargo planes to bolster its internal shipping organization. The company is also working on drone delivery technology.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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